Feingold: "U.S. Risks Fostering A Culture Of Corruption In Iraq"
Reports Reveal That Close to $100 Million Spent in South-Central Iraq Went Unaccounted For

May 4, 2005

Washington D.C. -- U.S. Senator Russ Feingold today criticized the "disorganized, sloppy management" of the reconstruction effort in Iraq after reviewing the three audit reports released today by the Special Inspector General for Iraq Reconstruction (SIGIR). In all three cases, the SIGIR found that "there was no assurance that fraud, waste, and abuse did not occur" in the administration of contracts and case assets. The SIGIR found indications of potential criminal activity in the case of the South-Central Iraq audit, where managers could not account for what happened to $96.6 million of $119.9 million that was disbursed in South-Central Iraq.

"These reports paint a picture of disorganized, sloppy management of both US taxpayer dollars and funds that belong to the Iraqi people themselves," Feingold said. "Billions of dollars, the success of the stabilization mission, and U.S. credibility are at stake, and these reports inspire very little confidence in the competence and transparency of U.S. efforts to date. These reports show that too often, contracts have been signed and money pushed out the door with little to no follow-up effort to determine just what has been achieved on the ground. The U.S. risks fostering a culture of corruption in Iraq. American taxpayers have shouldered a tremendous financial burden to support the Administration's policies in Iraq. They deserve better than this."

The reports found that:

* Managers responsible for overseeing reconstruction contracts often could not even locate the contract files themselves; * Managers could not account for what happened to $96.6 million of $119.9 million that was disbursed in South-Central Iraq; and * U.S. officials have failed to adhere to the commitments that they made to Iraqi authorities regarding the management of Iraqi funds.

Feingold created the position of IG through an amendment that he offered to a 2003 supplemental bill. Last month, Feingold offered an amendment to the current Iraq and Afghanistan supplemental bill to extend the mandate of the SIGIR. Currently the SIGIR's work is set to wind down once the bulk of the reconstruction funds for Iraq have been obligated. But the rate of obligations is now dramatically outpacing the rate of expenditures. Unfortunately, Feingold's amendment was defeated on a point of order.

A fact sheet on Feingold's work on this issue is attached.

Senator Feingold's Efforts to Create and Extend the Office of the Iraq Inspector General

Senator Russ Feingold has led the effort to create and extend the Office of the Inspector General (IG) for Reconstruction in Iraq. The IG serves as a watchdog over the billions of U.S. taxpayer dollars allocated for Iraq reconstruction. The IG's office has been effective in its role, uncovering a wide range of problems with the use of taxpayer funds in Iraq. The IG will be issuing its next quarterly report on May 9, and it is also issues audit reports on an ongoing basis.

Senator Feingold will be offering legislation to ensure that the work of this IG continues until the lion's share of the reconstruction dollars has been disbursed. As of March 16, 2005, just over $6 billion of the nearly $21 billion that Congress appropriated for reconstruction in Iraq had been disbursed.

Creation and Extension of the Office of the Inspector General Creation of the IG, October 2004: During the debate on the $87 Iraq Supplemental Appropriations Bill, Senator Feingold added language creating the IG to oversee the operations of the Coalition Provisional Authority (CPA-IG). A modified version of the amendment was retained in conference and signed into law.

Extension of the IG, October 2004: Senator Feingold authored provisions, which passed as part of the FY 2005 Defense Appropriations Bill, to ensure that the independent IG continues to monitor U.S. dollars meant for reconstruction, even though the CPA has dissolved. Without the Feingold amendment, that oversight would have disappeared at the end of 2004. The office is now known as Special Inspector General for Iraq Reconstruction.

Highlights of Accomplishments of the Office of the Inspector General

June 2004: In one of its first reports, the IG found that the CPA did not know how many employees were working there, more than a year after deployment of personnel to support the CPA had begun.

November 2004: The IG called for some payments to be withheld from Halliburton for its work in Iraq after finding that the company's record-keeping was so bad that auditors could not even judge whether the firm had fulfilled its obligations to the U.S. government. January 2005: An IG report found that the U.S. occupation authority in Iraq was unable to keep track of $8.8 billion it transferred to government ministries, which lacked financial controls, security, communications and adequate staff.

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